The opinion of the court was delivered by: YVETTE KANE, District Judge
Before the Court are cross motions for summary judgment. (Doc.
Nos. 70 and 73.) The motions have been fully briefed and are ripe
for disposition. For the reasons that follow, Plaintiff's motion
for summary judgment will be granted in part and denied in part,
and Defendant's motion for summary judgment will be granted in
part and denied in part.
This insurance dispute originated from a February 9, 2001
Demand for Arbitration filed by Beth Kaplan ("Kaplan"), a former
executive officer of Plaintiff Rite Aid Corporation, asserting
numerous claims against Plaintiff. In August 1996, Ms. Kaplan
left her Vice President position with Proctor & Gamble to become
a senior executive in charge of Plaintiff's Cosmetics and
Fragrance Division. According to Kaplan, her decision to sign an
employment contract with Plaintiff was based in part on
information found within Plaintiff's public disclosures, annual
reports, and SEC filings. After two and a half years, Plaintiff became embroiled in stockholder lawsuits
and regulatory investigations regarding certain financial
practices conducted by Plaintiff's management. These financial
irregularities resulted in a $1.6 billion correction to prior
years' earnings, dramatic reduction in Plaintiff's stock price,
and criminal prosecution of members of Plaintiff's management. On
November 12, 1999, Kaplan terminated her employment agreement
with Plaintiff and resigned from the company.
In her Demand for Arbitration, Kaplan alleged, inter alia,
that Plaintiff had negligently or intentionally misrepresented
its financial strength in documents given to her prior to her
employment, thereby fraudulently or negligently inducing her to
take employment with a company financially weaker than
advertised. Kaplan also alleged that the taint of association
with Plaintiff handicapped her ability to secure employment
commensurate with her experience.
Defendant Liberty Mutual issued a Commercial General Liability
policy to Plaintiff for years 1997, 1998, and 1999 ("Policy").
During all times relevant hereto, Plaintiff was also covered by
an Employment Practices Liability Insurance policy issued by
Zurich American Insurance ("Zurich"). By letter dated July 6,
2001, Plaintiff notified Zurich of the arbitration. By letter
dated August 27, 2001, Plaintiff notified Defendant of the
arbitration with Kaplan.
On November 14, 2002, an arbitration panel issued a ruling
awarding Kaplan nearly $5,000,000, plus interest, in damages, but
finding for Plaintiff on Kaplan's claims for pre-employment
misrepresentations and injury to reputation. On January 22, 2003,
Plaintiff and Kaplan entered a confidential settlement agreement.
On September 26, 2003, Defendant commenced an action in the
United States District Court for the Northern District of California, seeking declaratory
judgment with respect to potential liability under the Policy. On
October 8, 2003, Plaintiff initiated the instant action against
Defendant, Zurich, and Federal Insurance Company ("Federal
Insurance"), asserting breach of contract and bad faith under the
Pennsylvania Bad Faith statute, 42 Pa. Cons. Stat. Ann. § 8371.
In addition, Plaintiff moved to transfer the California action to
this Court, or in the alternative, dismiss the action. On
December 18, 2003, the California court transferred Defendant's
declaratory judgment action to this Court, whereupon this Court
dismissed the case as unnecessarily duplicative to the instant
On February 11, 2004, Plaintiff filed an amended complaint.
(Doc. No. 29.) On February 15, 2005, Plaintiff filed its instant
motion for summary judgment. (Doc. No. 70.) On February 18, 2005,
Defendant filed its motion for summary judgment. (Doc. No. 73.)
On February 18, 2005 and March 18, 2005, Plaintiff voluntarily
dismissed Zurich and Federal Insurance respectively from this
III. Summary Judgment Standard
Summary judgment is proper where "the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law." Fed.R.Civ.P. 56; White v.
Westinghouse Elec. Co., 862 F.2d 56, 59 (3d Cir. 1988). A
factual dispute is material if it might affect the outcome of the
suit under the applicable law. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A factual dispute is genuine only if
there is a sufficient evidentiary basis that would allow a
reasonable fact-finder to return a verdict for the non-moving
party. Id. at 249. The evidence presented must be viewed in the
light most favorable to the non-moving party. Id. "The inquiry
is whether the evidence presents a sufficient disagreement to
require submission to the jury or whether it is so one sided that one party must, as a matter of
law, prevail over the other." Id. This standard does not change
by virtue of cross-motions being presented. United States v.
Hall, 730 F. Supp. 646, 648 (M.D. Pa. 1990).
The moving party has the initial burden of identifying evidence
that it believes shows an absence of a genuine issue of material
fact. Childers v. Joseph, 842 F.2d 689, 694 (3d Cir. 1988).
Once the moving party has shown that there is an absence of
evidence to support the non-moving party's claims, the non-moving
party may not simply sit back and rest on the allegations in the
complaint. Instead, the non-moving party must "go beyond the
pleadings and by [its] own affidavits, or by the depositions,
answers to interrogatories, and admissions on file, designate
specific facts showing that there is a genuine issue for trial."
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The
evidence must be viewed in the light most favorable to the
non-movant. See Groman v. Township of Manalapan, 47 F.3d 628,
633 (3d Cir. 1995). Summary judgment should be granted where a
party "fails to make a showing sufficient to establish the
existence of an element essential to that party's case and on
which that party will bear the burden at trial." Celotex,
477 U.S. at 322.
With respect to the sufficiency of the evidence that the
nonmoving party must provide, a court should grant summary
judgment where the nonmovant's evidence is merely colorable,
conclusory or speculative. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249-50 (1986). There must be more than a scintilla of
evidence supporting the nonmoving part and more than some
metaphysical doubt as to the ...